Fannie Mae <FNM.N> shares rose 8.9 percent on Tuesday after
the company reported its third straight quarterly loss, and
said it would raise capital to cushion itself from losses and
maintain its ability to support the mortgage market.

"I think the marketplace thinks the money will be put forth
profitably," James Lockhart, director of the Office of Federal
Housing Enterprise Oversight, said in the CNBC interview.

OFHEO has eased capital requirements on Fannie Mae and
Freddie Mac under condition that the two government-sponsored
enterprises would also raise money.

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With Wall Street mortgage securities programs frozen, the
two GSEs have seen their share of the mortgage bond market
surge to more than 90 percent this year from less than 45
percent in 2006. Fannie Mae and Freddie Mac have tightened loan
standards and boosted fees, increasing the quality of their
investments and obligations.

Lower market values on investments and guarantees made by
Fannie Mae during the housing boom have added to their losses.
Some mortgage securities owned have been downgraded, but Fannie
Mae believes they are protected from losses since they intend
to hold them to maturity, Lockhart said.